Hopes are high that a new government taskforce aimed at implementing fair pay for contractors could also help prevent Hawke's Bay building firms going to the wall.

Last week Workplace Relations and Safety Minister Iain Lees-Galloway said former National Party Prime Minister Jim Bolger would lead a team tasked with making recommendations on how the Government could establish new fair pay agreements across whole sectors of industry.

"Workers and employers know their sector best," Lees Galloway said.

"By working together through effective engagement and bargaining co-operatively, workers and employers can set standards that are relevant to their sector and support productivity and growth.

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"The aim of FPAs [fair pay agreements] is to prevent a race to the bottom, where some employers are undercut by others who reduce costs through low wages and poor conditions of employment.

"Through the team led by Jim Bolger, the Government intends to introduce legislation to allow employers and workers to create fair pay agreements that set minimum employment terms and conditions for all workers in the industry or occupation covered by the agreement.

"Fair pay agreements will help lift wages and conditions and ensure good employers are not disadvantaged by paying reasonable, industry-standard wages."

Last year, prominent Hawke's Bay home-builder Fargher Construction went into liquidation in the midst of a regional construction boom, after facing cashflow issues compounded by the withdrawal of credit from a major supplier.

At the time New Zealand Building Industry Federation chief executive Bruce Kohn cautioned that profitability margins were commonly cut within some players in the industry to beat out competitors - a practice that threatened the viability of the competing building businesses.

Kohn has welcomed the appointed of Bolger to lead the taskforce.

"Jim Bolger is an ideal person to lead this initiative. He has background as a Labour Minister prior to being Prime Minister and traverses both side of the political spectrum.

"His understanding of the pressures coming to bear on both the building industry and the property development sector from rising land prices will be helpful to the exercise.

"If the initiative is to succeed his instinctive understanding of what makes Kiwis tick will be a vital element in balancing the respective perspectives of both employers and employees."

Hawke's Bay Chamber of Commerce chief executive Wayne Walford said it would be "interesting" to see what came out of the initiative.

Although anything that was good for employers and employees was normally not good for customers and that would affect inflation, creating a negative impact on the economy, productivity improvements were likely.

"As much as the concept will drive up prices and add to inflation, we know it will happen with the current Government so the best option for businesses, customers and exporters is a slow-stepped implementation rather than a large jump."

A spokesman for the Workplace Minister said the Government was also dedicated to introducing statutory support and legal rights for "dependent contractors" who are effectively workers under the control of an employer, but who do not receive the legal protections that are currently provided to employees under the law.

It would also extend the right to organise and bargain collectively to contractors who primarily sold their labour.

The eventual implementation of the new fair pay agreements work could also include examining the conditions for contractors within sectors.